By Phil Lim
The hired hands of super villains often walk among us. They hide in plain sight, impossible to distinguish from the innocent bystander. Such is the case with phantom employees. A payroll transaction file contains thousands of legitimate employees, and it’s nearly impossible to distinguish them at a glance from the employees that are fictitious.
There are many motivations for the creation of these phantom employees, from hiding facilitation payments to foreign officials, to outright fraud. Whatever the case, you’ll need a set of analytic superpowers to cut through the risk. Today, we’ll only focus on one particular test, but we’ll also outline other potential tests for your consideration.
Risk: Phantom employees on the payroll may be used to channel funds to an unauthorized party, or as a vehicle for fraud.
Test: Identify duplicate employee records where there is more than one employee associated with the same bank account or address.
Data Acquisition: Please refer to the previous Top 25 test for acquiring payroll and timekeeping data. Our focus today will be on the HR system, and specifically around employee bank accounts and addresses. Make sure you have at least the employee name, employee number, and employee address or bank account number.
Conclusion: You’ll want to be aware that spouses who are both employees will likely show up in this test, and that’s good! That way you know your analysis is working. As mentioned in the prologue, this is just one of a set of analytic superpowers you can use to identify phantom employees. Others might include analyzing employee addresses for PO Boxes, or identifying employees without any payroll deductions, or invalid/duplicate tax identification numbers (SSN or SIN).
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